By exercising caution, investors could benefit in all conditions

A new year brings new prospects, but investors must always exercise caution, even in favourable conditions. Investment managers, such as the team at Eric Sturdza Investments, can offer opportunities to those looking to enter the market

Retrospective assessments always have the benefit of hindsight and are limited since they can only tell us what has already happened. For individuals who know where to look, there are signs of what is likely to come

Last year was a challenging one from a macro point of view, with uncertainty persisting throughout. The ongoing trade war between the US and China, the never-ending Brexit saga and protests in Hong Kong all contributed to the instability that defined 2019. This backdrop has understandably created a difficult and sometimes nerve-racking environment for investors, leading some to adopt a ‘wait and see’ approach.

However, 2019 was not wholly negative for investors, with the equity space performing well. Central banks were also supportive throughout the year, with the US Federal Reserve once again cutting rates, while Eric Sturdza Investments’ funds returned an average of 18 percent over the first 11 months of 2019, giving our long-term investors a lot to be positive about.

At Eric Sturdza Investments, we have an equity bias within our product offering, which made 2019 a strong year for our funds. All funds within our EI Sturdza Funds division delivered positive absolute returns on a year-to-date basis to the end of November. Our Strategic Bond Opportunities Fund achieved 7.65 percent returns, while our Strategic Europe Quality Fund reached 26.74 percent. Additionally, the majority of our funds added value over and above their respective indices, demonstrating the effectiveness of the active management approach taken by our portfolio management teams.

A backdrop of instability has understandably created a difficult and sometimes nerve-racking environment for investors, leading some to adopt a ‘wait and see’ approac

Tough love
Retrospective assessments always have the benefit of hindsight and are limited since they can only tell us what has already happened. To anticipate what we may face in 2020, we spoke with Marc Craquelin, who is a senior advisor in the Sturdza Family Fund’s asset allocation team and former chief investment officer of La Financière De L’Echiquier.

Craquelin believes many previously unloved stocks that have started to catch up with better performers may continue to grow stronger in the year ahead. This could be particularly relevant to European markets, which have started to make ground on international markets. Similarly, small and mid-caps, which Craquelin also believes have been unloved over the past two years, are starting to offer good opportunities.

The backlash against globalisation looks set to continue throughout 2020 and it may be wise for investors to consider this when adjusting their portfolios

In addition, Craquelin suggests that cyclical stocks have been heavily marked down as a result of the current macro environment – particularly those impacted by the US-China trade war. As such, he believes they may benefit from being reweighted in investor portfolios. He does caution, however, that getting the entry point correct will be essential. Craquelin expects the global economy to be stronger in 2020, but equities are unlikely to enjoy the same level of returns.

Good as new
A new year provides an opportunity for investors, central banks and privately held firms to start afresh. Of course, equity markets will remain as unpredictable as ever, but for individuals who know where to look, there are signs of what is likely to come.

The backlash against globalisation looks set to continue throughout 2020 and it may be wise for investors to consider this when adjusting their portfolios. Still, many remain cautiously optimistic that a global recession will be avoided, leaving a relatively favourable environment for those wishing to enter the stock market. Perhaps the best way to ensure the success of these investments is to partner with the right fund management firm.

At Eric Sturdza Investments, we are confident in our fund range and our investment team’s ability to add value to our investor portfolios. We will continue to look for opportunities to selectively expand our fund range, but only with class-leading strategic partners that can deliver long-term value for our investors.